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Xerox tops expectations for second-quarter earnings

Rochester Business Journal
July 25, 2014

Shares of Xerox Corp. were up more than 3 percent Friday after the company reported its second-quarter financial results before the market opened.

Shares of Xerox (NYSE: XRX) were trading midday at $13.26, up from Thursday’s close of $12.72.

Xerox reported Friday before markets opened a drop in second-quarter sales and profit as growth in its commercial services, document outsourcing and international business was offset by continued pressure in its government health care business.

The company reported net income attributable to Xerox of $266 million, or 22 cents a share, versus net income of $271 million, or 24 cents a share, a year ago. Adjusted earnings per share for the most recent quarter, which excludes 5 cents related to the amortization of intangibles, was 27 cents.

Sales were down 2 percent to some $5.3 billion, compared with nearly $5.4 billion in the second quarter 2013.
Analysts polled by Thomson Reuters expected Xerox to report earnings per share of 26 cents on sales of $5.3 billion.

Revenue from the company’s services business, which represented 57 percent of total revenue, was $3 billion, up 2 percent year-over-year, or 1 percent in constant currency. Revenue from the company’s document technology business, which represented 40 percent of total revenue, was $2.1 billion, down 6 percent, or 7 percent in constant currency.

“The second quarter demonstrates progress in executing on our strategy,” Chairman and CEO Ursula Burns said in a statement. “As we enter the second half of the year, we are focused on improving on our progress and capitalizing on opportunities that will shape the success of our business.”

The company generated $325 million in cash flow from operations during the second quarter and $611 million for the first half. In the second quarter, Xerox repurchased $204 million in stock; $479 million in the first half. Additionally, Xerox spent $227 million on acquisitions in the quarter and $281 million in the first half, a move company leaders said strengthened its services portfolio.

During the quarter, Xerox recorded net restructuring and asset impairment charges of $38 million, which includes approximately $41 million of severance costs related to headcount reductions of some 980 employees worldwide, $1 million of lease cancellation costs and $3 million of asset impairments, which were primarily related to a surplus facility in Canada. The costs were partially offset by $7 million of net reversals for changes in estimated reserves from prior period initiatives.

Worldwide employment of roughly 142,400 decreased by roughly 700 from the end of 2013, due to restructuring-related actions and normal attrition outpacing hiring and the impact of acquisitions, Xerox said.

Xerox employs 6,722 people in the six-county Rochester area, up nearly 300 from a year ago.

For the third-quarter 2014, Xerox expects earnings per share of 21 to 23 cents. Third-quarter adjusted earnings per share is expected to be 25 to 27 cents. The company expects full-year earnings per share of 92 to 96 cents and $1.09 to $1.13 on an adjusted basis.

 (c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail

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